Connecticut Insurance Producer Fees

Connecticut Insurance Producer Fees

By: Alex Reger, Associate Analyst December 21, 2020 | 2020-R-0308

Issue

Describe insurance producer fees allowed under state law.

Summary

State law allows insurance producers to charge service fees in accordance with insurance department regulations (CGS ? 38a-707 and Conn. Agencies Regs. ?? 38a-707-1 to 38a-707-9).

Before charging consumers, producers must get signed confirmation of the premium and any associated fees. The permitted service fee amount varies by insurance type (known as a "line"), as shown in Table 1 below. Unless specifically noted, fees may be charged only for initial policies, unless a renewal requires new underwriting (Conn. Agencies Regs ? 38a-707-8).

Table 1: Connecticut Insurance Producer Fees

Insurance Line Automobile Assigned Risk All Other Automobile Non-standard Owners, Landlords, and Tenants; and Non-standard Manufacturers and Contractors Workers' Compensation Assigned Risk

Fee $35 $35 Up to 5% of the premium, capped at $150

1% of the premium, with a minimum fee of $10, but capped at $250

Regulation Conn. Agencies Regs. ? 38a-707-2 Conn. Agencies Regs. ? 38a-707-2 Conn. Agencies Regs. ? 38a-707-3

Conn. Agencies Regs. ? 38a-707-4

cga.olr OLRequest@cga.

Connecticut General Assembly Office of Legislative Research Stephanie A. D'Ambrose, Director

(860) 240-8400 Room 5300

Legislative Office Building

Insurance Line Non-standard Fire and Allied Lines "Fair Plan" Fire (i.e., a specific plan for high risk insureds) Substandard Errors and Omissions Surplus Lines

Table 1 (continued)

Fee 1% of the premium

Regulation Conn. Agencies Regs. ? 38a-707-5

None

Conn. Agencies Regs. ? 38a-707-5

$10 or 5% of the premiums, up to $250 A producer and surplus lines broker involved in the same transaction may charge (1) up to $250 combined or (2) up to 5% of the premium, capped at $500 combined. Applies to initial and renewal business.

Conn. Agencies Regs. ? 38a-707-6

Conn. Agencies Regs. ?? 38a-707-7 & 38a-707-8(b)

Producers or lines not listed in the table may submit potential fees to the insurance department for individual approval (Conn. Agencies Regs. ? 38a-707-8).

Producers who are federally registered investment advisors are generally exempt from these regulations (CGS ? 38a-707(d)).

State regulation also allow producers to charge for reimbursement of (1) inspection report fees, (2) motor vehicle department reports, (3) policy reports, (4) credit card service fees, (5) regulatory fees from other jurisdictions, (6) overnight mail costs, or (7) necessary telephone calls (Conn. Agencies Regs. ? 38a-707-1).

AR:kc

2020-R-0308

December 21, 2020

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